5 Things you need to know before the markets open in Australia and around the world
Here’s 5 things you need to know as the markets open around the world.
1. Key Ingredient for Electric-Vehicles Hits Supply Limits Amid Dispute
The world’s largest producer of lithium – a key ingredient in electric-car batteries – has become embroiled in a nine-month battle with the Chilean government over pricing, production quotas, and environmental concerns. The lack of progress in negotiations poses a growing risk to electric vehicle manufacturers such as Tesla, Nissan, BMW, and many others.
Albemarle Corp., a U.S. company, has been working to satisfy the booming demand for lithium, which is projected to reach around 500,000 tons over the next seven years from a current 64,000 tons. The company aims to invest almost $1 billion to triple its Chile production capacity, in a country which has more lithium reserves than anywhere on the planet.
Yet the company has faced resistance from the Chilean government, which has raised a series of complaints threatening to slow the expansion. The primary focus of the dispute has been a perceived reluctance on the part of the U.S. company to adequately detail and share its expansion plans, leading to the rejection of appropriate licenses.
A further dispute centres on a previous agreement for Albemarle to discount the sale of lithium to dedicated companies exploring lithium products in Chile. This formed part of the Chilean government’s ambition to move the country across the value chain for lithium products and capture a share of the more lucrative technologically advanced battery design and production business.
The two parties will now enter into arbitration after a Chilean agency spotted the U.S. company selling lithium at a price much lower than the market average to its own subsidiaries in the U.S. and Germany. Each side has now been forced to put their ambitious plans on hold.
2. Bear Market Kept at Bay as Stocks Rise from Lows
The volatility of U.S. markets was highlighted by a significant increase in the value of stocks this week with market performance defying bear market concerns. Both the S&P 500 and the Dow Jones Industrial Average closed higher than the start of the day, with the S&P seeing the biggest two-day rally since August 2015.
Market performance this week comes amidst the S&P 500 facing a 15 per cent drop for the quarter. Political turmoil in Washington, with President Donald Trump holding firm on a government shutdown over a funding dispute for his border wall, and the threat of higher interest rates have significantly impacted investor sentiment. Data shows investors seeking traditional save havens such as gold and Treasury 10-year bonds.
This week’s rally was seemingly driven by positive data on the American consumer along with reassurance on progress with U.S.- China trade talks. With jittery market sentiment pervasive in the current market however, volatility soon returned.
Globally, losses in utility companies and carmakers pulled the Stoxx Europe 600 Index into the red, while Tokyo’s Topix Index saw record gains. As the year draws to a close, continued U.S. government funding, the swearing in of Brazil’s new President, and ongoing U.S. – China trade talks will continue to provide a political backdrop to more fundamental market concerns such as government gridlock, consumer spending health and growing interest rates.
3. Scientists Discover New Material Called Black Silver
Researchers at the Singapore University of Design and Technology (SUTD) have discovered a material 1,000 times smaller than the width of a human strand of hair. Named Black Silver by its discoverers, the material has the potential to improve solar energy conversion and biomolecule detectors.
As the nanomaterial is created without the use of acids, it can easily be coated over different materials in order to give them a new purpose. An inexpensive material, it interacts with visible and infrared light.
SUTD’s Assistant Professor Robert Simpson said, “So far we have deposited the material over 100 mm diameter plastic, Si and Silica samples. This single step large area fabrication method makes the material industrially relevant. Indeed, the nanostructures were grown using a modified technique that is commonly used to manufacture tinted films on large area window glass,” Simpson said.
Black Silver has the capacity to improve solar cells, as the nanomaterial absorbs light at a strong capacity.
4. Tesla adds Oracle Founder Larry Ellison to Board of Directors
Reacting to the requirement to add two new independent board members as part of a settlement Elon Musk and Tesla signed with the Securities and Exchange Commission (SEC) this year, billionaire Oracle founder Larry Ellison and former Kellogg executive Kathleen Wilson-Thompson are joining the company’s board of directors, Tesla announced Friday.
In October Ellison stated that Tesla was his second-largest investment. He also said that he and Musk are close friends. Wilson-Thompson spent 17 years as an executive at the Kellogg Company.
The appointments follow Musk’s statements on Twitter earlier this year about plans to take Tesla into private ownership, which saw the SEC charge the Tesla founder with securities fraud. He settled with the agency two days after rejecting its initial offer.
Critics have previously viewed Tesla’s board as too weak to stand up to Musk. This has mainly been due to membership of those with close personal and professional ties to Musk. Ellison’s friendship with Musk will not raise any issues with the SEC but may drive investor concern around Musk’s continued influence. Ellison’s large holding and his subsequent desire to act in the best interests of the company, despite his lack of knowledge of the auto industry, may yet buoy investor confidence.
A further part of the agreement with the SEC requires Musk’s public communications about Tesla to be reviewed and approved, though he has recently told 60 Minutes that no one was reading his tweets. Tesla followed up with a statement that said the settlement “is being complied with.”
5. 2019 to be the Year of the Electric Luxury Car
This year’s release of the Jaguar I-Pace marks the beginning of the all-electric luxury car and SUV market. Next year will see the entry of Audi, Mercedes-Benz, Porsche and BMW to the market.
Audi is expected to ramp up electric car production, and is already taking $1,000 deposits for its E-Tron SUV which is expected to be available in the United States next spring. The starting price will be set at $75,000.
Mercedes has joined Audi in revealing its first electric SUV, and like Audi, the car looks very similar to its regular line of SUV’s with a slightly lower, sportier shape. Porsche’s 600 horsepower Taycan will join the market with production at the end of next year. Capable of reaching 60 miles an hour in 3.5 seconds, it represents one of the faster electric cars and may mark a potential change in image for the industry.
Mini, a subsidiary of BMW, is expected to launch its first electric vehicle next year, despite not releasing any details about the potential features or design.